Ken Rogoff and David Ludwig have a piece in the New York Times detailing how obesity is such a cost to us all that something must be done. They make a mistake which Rogoff, being an economist and a good one to boot, should know not to make. He fails to look at opportunity costs and thus believes that obesity costs healthcare systems money.
This is not true, obesity saves money. Obesity reduces the costs of running the healthcare system (and pension and retirement systems) precisely because it does indeed kill people.
We cannot therefore accept, nor make, this argument, as Rogoff and Ludwig do: “Obesity doesn’t just hurt individuals’ pocketbooks; it also affects the national budget deficit. The epidemic substantially increases federal entitlement spending for medical costs through Medicare, Medicaid and Supplemental Security Income.” Much of the rest of what they say is fair enough: obesity shortens lives, it’s usually caused by a mix of bad diet and lack of exercise, etc. It could even be true that something must be done by the government to reduce it.
But curing or reducing obesity would raise costs on healthcare and retirement systems.
The reason is, as a colleague of mine in London’s think tank world, Chris Snowdon, puts it: “None of this makes sense to economists who understand that healthier lifestyles not only increase healthcare costs but also put a strain on other government departments by raising demand for pensions and social care.” There is even a report on the issue.
Sir Richard Doll, who actually proved the relationship between smoking and lung cancer in the first place, was quite insistent that more smokers would not cost healthcare systems more money. The point is that we all die of something. It’s the what and the when that is at issue, not the if. The longer we live while waiting to find out, the more healthcare we’re going to get in the interim.
Someone dying of obesity doesn’t cost anything very much different from dying of smoking, alcoholism, cancer, or heart disease, nor from someone being healthy until they’re not. The vast majority of healthcare expenses come in the last year of life, and it doesn’t seem to vary all that much. The variations of lifetime costs come from how many years we all enjoy those minority of the total costs which are the treatments of those thing which don’t kill us.
This concept is significantly more true in the American healthcare system. Nearly all healthcare for those older than 65 is government-paid through Medicare. The vast majority of costs for those under that age are private, non-government costs. Those who die before or shortly after arriving on the government healthcare budget save taxpayers a fortune.
We do have proper peer-reviewed proof of this as well. “Although effective obesity prevention leads to a decrease in costs of obesity-related diseases, this decrease is offset by cost increases due to diseases unrelated to obesity in life-years gained.” The finding is that the cost is, as with smoking, more than offset. Lifetime health service costs were, in Euros, for healthy people €281,000, for obese people €250,000, and for smokers €220,000. That doesn’t include pensions costs. And it’s really pretty obvious that those who die young pay into pensions systems but draw out of them for some lesser number of years.
By the way, this paper was thought to be of such truth that it was reported in the New York Times.
It’s entirely fair to argue that obesity has costs to people, for that’s quite obviously true. Equally true is that there are direct costs to treating the diseases caused by obesity. But that dying young part means that total healthcare costs are lower for the obese, not higher. To argue that we’ll save tax money by beating obesity is thus wrong.
I’m not saying that we shouldn’t do something about obesity. I am saying it will cost us more money as we fight obesity. Someone really should tell Rogoff and Ludwig, shouldn’t they?
Tim Worstall (@worstall) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a senior fellow at the Adam Smith Institute. You can read all his pieces at The Continental Telegraph.
